I am following the lecture notes here
which says balance of payments for a country, is zero
CA + KA + FA + SD + RES = 0
The variables are current account, capital account, financial account, statistical discrepancy, reserves. I attempted to verify this balance using data from Fred.
import pandas as pd, datetime, os from pandas_datareader import data start=datetime.datetime(1970, 1, 1) end=datetime.datetime(2018, 5, 1) df = data.DataReader(['BPCFTT01USQ637N','BPBLTD01USQ636N'], 'fred', start, end) df.columns = ['finacct','goodacct'] df.to_csv('trade.csv') import pandas as pd df = pd.read_csv('trade.csv',parse_dates=['DATE']) df = df.set_index('DATE') df = df.dropna(axis=0) df['total'] = (df.finacct + df.goodacct) / 1e9 df['interpolate'] = pd.rolling_mean(df.total,window=10) df[['total','interpolate']].plot()
In the code above I compute the sum of Capital Accounts and Financial Accounts, and Current Account Balance: Total Trade of Goods. I also calculate a running average on this sum. The plot looks like
The sum is not zero, the interpolation sort of hovers around -50 billion dollars. My question is can this be considered zero since US GDP > 15 trillion dollars, much higher than this discrepancy, or should I look for another time series to plug this hole?